Accelerated Death Benefits

An Accelerated Death Benefit, also known as ADB, offers part of one's life insurance policy to a terminally ill individual. Depending on the policy, the patient usually needs to have a life expectancy of 12 or 24 months or less. This cash advance allows the patient to pay for medical and living expenses.

Not every insurance policy offers accelerated death benefits, as it is a new option to policyholders. When the viatical industry began to soar in the early 1990's, insurance companies created an option to their customers called accelerated death benefits. Sometimes the accelerated death benefits come with life insurance policies at no extra charge. More frequently, there is an additional premium to add accelerated benefits to a policy, an annual fee, or there is no charge until the option is used. The amount paid to the patient also varies significantly between different policies. While one policy can pay only 25% of the value, another can pay up to 92%. Because of the varying costs and percentage payouts of accelerated death benefits, it is important to shop around before signing a contract.

After the percentage of the life insurance policy is paid to the terminally ill, the money that remains is distributed to the policy owner's beneficiary.